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EXHIBIT 10.33
LOAN AGREEMENT
This Loan Agreement is entered into effective this 9 day of Sept,
1996, between GAINSCO, INC., a Texas corporation, with its principal offices at
000 Xxxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxx 00000 ("Borrower"); and BANK ONE, TEXAS,
NATIONAL ASSOCIATION, a national banking association with offices at 000
Xxxxxxxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxx 00000 ("Lender").
In consideration of the mutual covenants and agreements herein
contained and of the loan described below, Borrower and Lender agree as
follows:
ARTICLE 1
GENERAL TERMS
Section 1.1 Terms Defined Above. As used in this Agreement, the terms
"Borrower" and "Lender" have the meanings indicated above.
Section 1.2 Certain Definitions. As used in this Agreement, the
following terms have the meanings assigned below, unless the context otherwise
requires:
"Agreement" means this Loan Agreement, as the same may from time to
time be amended or supplemented.
"Base Rate" means the variable rate of interest per annum established
by Lender from time to time as its base rate, whether or not charged. Such rate
is established by Lender as a general reference rate of interest, taking into
account such factors as Lender may deem appropriate, it being understood that
many of Lender's commercial or other loans are priced in relation to such rate,
that such rate is not necessarily the lowest or best rate actually charged to
any customer and that Lender may make various commercial or other loans at
rates of interest having no relationship to such rate. In the event there
exists any dispute or uncertainty with respect to the interest rate
constituting the Base Rate, the rate certified in writing by the President,
Cashier, any Vice President, or any Assistant Cashier of Lender as constituting
the Base Rate shall be conclusive evidence of such fact.
"Borrowing Request" means a request for the Loan to be made pursuant
to Section 2.1 hereof.
"Business Day" means any day other than a Saturday, Sunday or day on
which commercial banks are authorized or required to be closed under the laws
of the State of Texas.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" means the occurrence of any of the events specified
in Section 7.1 hereof, provided that any requirement for notice or lapse of
time or any other condition precedent has been satisfied.
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"Excepted Liens" means: (i) liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith by appropriate action; (ii) liens in connection with workers
compensation, unemployment insurance or other social security, old age pension
or public liability obligations; (iii) legal or equitable encumbrances deemed
to exist by reason of negative pledge covenants and other covenants or
undertakings of like nature; (iv) legal or equitable encumbrances deemed to
exist by reason of the existence of any litigation or other legal proceeding or
arising out of a judgment or award with respect to which an appeal is being
prosecuted; (v) vendor's, carrier's, warehouseman's, repairman's, mechanic's,
xxxxxxx'x, materialman's, construction or other like liens arising by operation
of law in the ordinary course of business or incident to the construction or
improvement of any Properties in respect of obligations which are not yet due
or which are being contested in good faith by appropriate proceedings by or on
behalf of Borrower; (vi) servitudes, easements, restrictions, rights-of-way and
other similar rights in real or immovable Properties or any interest therein,
provided the same do not materially impair the use of such Properties for the
purposes for which it is held by Borrower.
"Facility Fee" means the fee on the revolving line of credit evidenced
by the Note, payable by Borrower to Lender in quarterly installments, and
calculated as three-eighths of one percent (3/8%) of the average for the prior
quarter of an amount determined daily equal to the difference between
$5,000,000 and the daily outstanding principal balance owing on the Loan.
"Financial Statements" means the financial statement or statements
described or referred to in Section 3.5 hereof
"Governmental Requirement" means any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, franchise, permit,
certificate, license, authorization or other direction or requirement
(including, without limitation any of the foregoing which relate to
environmental standards or controls, energy regulations and occupational,
safety and health standards or controls) of any (domestic or foreign) federal,
state, county, municipal or other government, department, commission, board,
court, agency or any other instrumentality of any of them, which exercises
jurisdiction over Borrower or any Properties of Borrower.
"Highest Lawful Rate" means the maximum non-usurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the Note or on other Indebtedness, as the case
may be, under laws applicable to Lender which are presently in effect or, to
the extent allowed by law, under such applicable laws which may hereafter be in
effect and which allow a higher maximum non-usurious interest rate than
applicable laws now allow.
"Indebtedness" means any and all amounts owing or to be owing by
Borrower to Lender in connection with this Agreement, the Note, any Security
Instruments and all other liabilities of Borrower to Lender from time to time
existing, whether in connection with this or other transactions.
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"Lien" means any interest in Properties securing an obligation owed
to, or a claim by, a Person other than the owner of the Properties, whether
such interest is based on the common law, statute or contract, and including
but not limited to the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt or a
lease, consignment or bailment for security purposes. The term "Lien" shall
include reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting the Properties.
"Material Adverse Effect" means any material and adverse effect on (i)
the assets, liabilities, financial condition, business, operations, affairs or
circumstances of Borrower from those reflected in the Financial Statements or
from the facts represented or warranted in this Agreement or any Security
Instrument, or (ii) the ability of Borrower to carry out its business as at the
date of this Agreement or as proposed at the date of this Agreement to be
conducted or meet its obligations under this Agreement, the Note and the
Security Instruments on a timely basis.
"Note" means the promissory note of Borrower described in Section 2.1
hereof and being in the form of note attached as Exhibit A hereto, together
with any and all renewals, extensions for any period, increases or
rearrangements thereof.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other form of
entity.
"Plan" means any plan subject to Title IV of ERISA and maintained by
Borrower, or any such plan to which Borrower is required to contribute on
behalf of its employees.
"Potential Default" means the occurrence of any of the events
specified in Section 7.1 hereof; whether or not any requirement for notice or
lapse of time or other condition precedent has been satisfied.
"Properties" means any interest of Borrower in any kind of property or
asset, whether real, personal or mixed, and tangible or intangible.
"Security Instruments" means the agreements or instruments described
or referred to in Subsection 8.1(d) hereof and any and all other agreements or
instruments now or hereafter executed and delivered by Borrower or any other
Person (other than participation or similar agreements between Lender and any
other lender or creditor with respect to any Indebtedness pursuant to this
Agreement) in connection with, or as security for the payment or performance
of the Note or this Agreement, as such agreements may be amended or
supplemented from time to time.
Section 1.3 Accounting Principles. Where the character or amount of
any asset or liability or item of income or expense is required to be
determined or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with generally
accepted accounting principles applied on a basis consistent with those
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reflected by the Financial Statements, except where such principles are
inconsistent with the requirements of this Agreement.
ARTICLE 2
AMOUNT AND TERMS OF LOAN
Section 2.1 The Loan and Facility Fee. (a) Subject to the terms and
conditions and relying on the representations and warranties contained in this
Agreement, Lender agrees to make a revolving loan in the amount of
$5,000,000.00 to Borrower (the "Loan"). To evidence the Loan made by Lender
pursuant to this Section, Borrower will execute and deliver the Note in the
principal amount of the Loan, which Note will be payable, bear interest and
otherwise be in the form attached as Exhibit A.
(b) The Note evidences a revolving line of credit for
Borrower. Pursuant to this Agreement and so long as there is no current Event
of Default, Borrower may borrow, repay, and re-borrow on the Note. Borrower may
request advances on the Note and make payments from time to time, provided that
the aggregate principal amount outstanding on the Note shall not at any time
exceed $5,000,000; and the unpaid principal balance of the Note shall increase
and decrease with each new advance or principal payment.
(c) On the first day of each February, May, August, and
November and at maturity, Borrower will pay to Lender the Facility Fee on the
Note. The Facility Fee is calculated as three-eighths of one percent (3/8%) of
the average for the prior quarter of an amount determined daily equal to the
difference between $5,000,000 and the daily outstanding principal balance owing
on the Loan. The Facility Fee is payable to Lender quarterly for the prior
quarter. The first payment of the Facility Fee will be due November 1, 1996.
Section 2.2 Notice and Manner of Borrowing. The amount and date of
each advance hereunder shall be designated by a Borrowing Request properly
completed. The Loan shall be made at the office of Lender and shall be funded
in immediately available funds in the amount so requested.
Section 2.3 Computation. All payments of interest shall be computed on
the per annum basis of a year of 360 days and for the actual number of days
(including the first day but excluding the last day) elapsed unless such
calculation would result in a usurious rate, in which case interest shall be
calculated on the per annum basis of a year of 365 or 366 days, as the case
may be.
Section 2.4 Voluntary Prepayments. Borrower may at its option
prepay the principal amount of the Note outstanding hereunder in the manner and
as provided therein.
Section 2.5 Payment Procedure. All payments and prepayments made by
Borrower under the Note or this Agreement shall be made to Lender at its
offices described above in immediately available funds before 12:00 noon, Fort
Worth time, on the date that such payment is required to be made. Borrower
hereby authorizes Lender, if and to the extent payment or
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prepayment is not made when due hereunder or under the Note or Security
Instruments, to charge from time to time against Borrower's account with Lender
any amount so due. Any payment received and accepted by Lender after such time
shall be considered for all purposes (including the calculation of interest, to
the extent permitted by law) as having been made on the next Business Day.
Section 2.6 Business Days. If the date for any Loan payment or
prepayment hereunder falls on a day which is not a Business Day, then, for all
purposes of the Note and this Agreement, the same shall be deemed to have
fallen on the next Business Day and such extension of time shall in such case
be included in the computation of interest.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this Agreement, Borrower represents and
warrants to Lender that:
Section 3.1 Corporate Existence. Borrower is a corporation duly
organized, legally existing, and in good standing under the laws of the State
of Texas and is duly qualified as a foreign corporation in all jurisdictions
wherein the Properties owned or leased or the business transacted by Borrower
makes such qualification necessary.
Section 3.2 Corporate Power and Authority. Borrower is duly
authorized and empowered to create and issue the Note; Borrower is duly
authorized and empowered to execute, deliver, and perform this Agreement and
the Security Instruments; and all corporate action on Borrower's part requisite
for the due creation and issuance of the Note and for the due execution,
delivery, and performance of this Agreement and of the Security Instruments
has been duly and effectively taken.
Section 3.3 Binding Obligations. This Agreement, the Note, and the
Security Instruments constitute valid and binding obligations of Borrower,
enforceable in accordance with their terms (except that enforcement may be
subject to any applicable bankruptcy, insolvency or similar laws generally
affecting the enforcement of creditors' rights).
Section 3.4 No Legal Bar or Resultant Lien. Borrower's execution,
delivery, and performance of the Note, this Agreement, and the Security
Instruments does not and will not violate any provisions of its articles of
incorporation or bylaws or any contract, agreement, instrument, or Governmental
Requirement presently in effect to which Borrower is subject, or result in the
creation or imposition of, or obligation to create, any Lien upon any
Properties of Borrower, other than those permitted by this Agreement.
Section 3.5 Financial Condition. The audited annual consolidated
financial statements of Borrower for its fiscal year ended December 31, 1995,
and the unaudited interim consolidated financial statements of Borrower for its
fiscal quarter ended March 31, 1996 (including any related schedules or notes),
which have been delivered to Lender, have been prepared in
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accordance with generally accepted accounting principles, consistently applied,
and fully and accurately present the financial condition and changes in
financial position of Borrower at the date or dates and for the period or
periods stated (subject only to normal year-end audit adjustments with respect
to such unaudited interim statements). No change, either in any case or in the
aggregate, has since occurred in the condition, financial or otherwise, of
Borrower which would have a Material Adverse Effect.
Section 3.6 Investments and Guaranties. At the date of this Agreement,
Borrower has not made investments in, advances to or guaranties of the
obligations of any Person, except those the material details of which are set
forth in the Financial Statements.
Section 3.7 Liabilities and Litigation. Except for liabilities
incurred in the normal course of business, Borrower has at the date of this
Agreement no material liabilities, direct or contingent, except those the
material details of which have been set forth in the Financial Statements. At
the date of this Agreement there is no litigation, legal, administrative, or
arbitral proceeding, investigation, or other action of any nature pending or,
to the knowledge of Borrower, threatened against or affecting Borrower or any
of its Properties which involves the possibility of any judgment of liability
not fully covered by insurance and which would have a Material Adverse Effect.
Section 3.8 Taxes; Charges. Borrower has filed all tax returns and
reports required to be filed and has paid all taxes, assessments, fees, and
other Governmental charges levied upon it or upon its Properties or income
which are due and payable, including interest and penalties, or has provided
adequate reserves for the payment thereof.
Section 3.9 Title. Borrower has good title to its material Properties,
free and clear of all Liens, except (i) Liens the material details of which
have been set forth in the Financial Statements, (ii) Liens and minor
irregularities in title which do not materially interfere with the occupation,
use, and the normal course of Borrower's business as presently conducted or
materially impair the value thereof for such business, or (iii) Liens otherwise
permitted or contemplated by this Agreement or the Security Instruments.
Section 3.10 Defaults. Borrower is not in default nor has any event or
circumstance occurred which, but for the passage of time of the giving of
notice, or both, would constitute a default (in any respect which would have a
Material Adverse Effect) under any loan or credit agreement, indenture,
mortgage, deed of trust, security agreement, or other agreement or instrument
evidencing or pertaining to any obligation for the payment of money of
Borrower, or under any material agreement or instrument to which Borrower is a
party or by which Borrower or its Properties are bound. No Potential Default
hereunder has occurred and is continuing.
Section 3.11 Casualties and Taking of Properties. Since the date of
the Financial Statements, neither the business nor the Properties of Borrower
have been materially and adversely affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition, or taking of Properties or cancellation of
contracts, permits, or concessions by any domestic or foreign government or any
agency thereof, riot, activities of armed forces, or acts of God or of any
public enemy.
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Section 3.12 Use of Proceeds; Margin Stock. The proceeds of the Note
will be used by Borrower for the purpose of providing financing for purchasing
treasury stock of Borrower, for Borrower's working capital, and for other
general corporate purposes. None of such proceeds will be used for the purpose
of purchasing or carrying any "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System (12 C.F.R., Part 221) or for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry a margin stock or for any other purpose which
might constitute this transaction a "purpose credit" within the meaning of such
Regulation U. Borrower is not engaged (principally or as one of Borrower's
important activities) in the business of extending credit for the purpose of
purchasing or carrying margin stocks. Neither Borrower nor any Person acting on
behalf of Borrower has taken or will take any action which might cause the
Note, this Agreement, or any of the Security Instruments to violate Regulation
U or any other regulation of the Board of Governors of the Federal Reserve
System or to violate Section 7 of the Securities Exchange Act of 1934 or any
rule or regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect.
Section 3.13 Compliance with the Law. Borrower is not:
(a) in violation of any Governmental Requirement; nor
(b) failed to obtain any license, permit, franchise, or
other governmental authorization necessary to the ownership of any of its
Properties or the conduct of its business;
which violation or failure would have (in the event such violation or failure
were asserted by any Person through appropriate action) a Material Adverse
Effect.
Section 3.14 ERISA. Borrower is in compliance in all material respects
with the applicable provisions of ERISA, and no "reportable event," as such
term is defined in section 4043 of ERISA, has occurred with respect to any Plan
of Borrower.
Section 3.15 No Material Misstatements. No information, exhibit, or
report furnished to Lender by Borrower in connection with the negotiation of
this Agreement contained any material misstatement or fact or omitted to state
a material fact or any fact necessary to make the statements contained therein
not misleading.
Section 3.16 Investment Company Act. Borrower is not an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
Section 3.17 Public Utility Holding Company Act. Borrower is not (i)
a "holding company," or (ii) a "subsidiary company" of a "holding company," or
(iii) an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," or (iv) a "public utility," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 3.18 Leases. Borrower enjoys peaceful and undisturbed
possession of all leases necessary for the operation of its Properties, none of
which contain any unusual or burdensome
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provisions which might affect or impair the operation of the Properties. All
leases are valid and in full force and effect.
ARTICLE 4
AFFIRMATIVE COVENANTS
Borrower will at all times comply with the covenants contained in this
Article 4, from the date hereof and for so long as any part of the Indebtedness
is outstanding;
Section 4.1 Financial Statements and Reports. Borrower will promptly
furnish to Lender from time to time upon request such information regarding its
business and affairs and financial condition as Lender may reasonably request,
and will furnish or cause to be furnished to Lender:
(a) Audited Annual Reports for Borrower - Promptly after
becoming available, and in any event within 90 days after the close of each
fiscal year of Borrower, the audited balance sheet of Borrower as at the end of
such year, the audited statement of profit and loss of Borrower for such year
and the audited statement of reconciliation of capital accounts of Borrower for
such year, setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, accompanied by the related report of
independent public accountants acceptable to Lender which report shall be to
the effect that such statements have been prepared in accordance with generally
accepted accounting principles consistently followed throughout the period
indicated, except for such changes in such principles with which the
independent public accountants shall have concurred; and
(b) Annual Statutory Reports - Promptly after becoming
available, and in any event within 90 days after the close of each fiscal year
of General Agents Insurance Company of America, Inc., an Oklahoma corporation,
MGA Insurance Company, Inc., a Texas corporation, and GAINSCO County Mutual
Insurance Company, a Texas chartered company (collectively the "Insurance
Companies"), the statutory statements of each of the Insurance Companies as at
the end of such year, prepared on both a consolidated and an individual basis
and in accordance with the requirements of the states in which the Insurance
Companies are licensed to operate (the "statutory basis"), setting forth in
each case in comparative form the corresponding figures for the preceding
fiscal year; and
(c) Quarterly Reports - Promptly after becoming
available, and in any event within 45 days after the end of each fiscal quarter
of Borrower, the balance sheets of Borrower as of the end of such period, the
statements of profit and loss of Borrower for such fiscal quarter and for the
period from the beginning of the fiscal year to the close of such fiscal
quarter, and the statements of reconciliation of capital accounts of Borrower
for such fiscal quarter and for the period from the beginning of the fiscal
year to the close of such fiscal quarter, setting forth in each case in
comparative form the corresponding figures for the same period of the preceding
fiscal year, certified by the chief financial officer of Borrower to have been
prepared in accordance with generally accepted accounting principles,
consistently followed throughout the period indicated,
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except to the extent stated therein, subject to the normal changes resulting
from year-end adjustments; and
(d) Quarterly Statutory Reports - Promptly after becoming
available, and in any event within 45 days after the end of each fiscal quarter
of the Insurance Companies, the statutory statements of each of the Insurance
Companies, prepared in accordance with the statutory basis; and
(e) Additional Information - As soon as available, such
other information, not otherwise required herein, respecting the business
affairs, assets, and liabilities of Borrower and the Insurance Companies, as
Lender may from time to time reasonably request.
All financial statements, reports, and information required concerning Borrower
shall be prepared and computed on a consolidated basis so as to include
information concerning its subsidiaries. All financial statements and reports
concerning the Insurance Companies shall be prepared on both a consolidated and
an individual basis and in accordance with the requirements of the states in
which they are licensed to operate.
Section 4.2 Certificates of Compliance. Borrower will furnish or cause
to be furnished to Lender concurrently with the furnishing of the quarterly
financial statements and statutory reports pursuant to Subsections 4.1(c) and
(d) hereof, a certificate of compliance signed by the chief financial officer
of Borrower (i) stating that a review of the activities of Borrower has been
made under his supervision with a view to determining whether Borrower has
fulfilled all of its obligations under this Agreement, the Security
Instruments, and the Note; (ii) stating that Borrower has fulfilled its
obligations under such instruments and that all representations made herein
continue to be true and correct (or specifying the nature of any change), or if
any Potential Default shall have occurred which is continuing, specifying such
Potential Default and the nature and status thereof; (iii) specifically
affirming compliance of Borrower and the Insurance Companies with Sections 6.1
through 6.5 hereof, in the form of the Compliance Certificate attached hereto
as Exhibit B; and (iv) containing or accompanied by such financial or other
details, information, and materials as Lender may reasonably request to
evidence such compliance.
Section 4.3 Taxes and Other Liens. Borrower will pay and discharge
promptly all taxes, assessments, and governmental charges or levies imposed
upon Borrower or upon its income or any of its Properties, as well as all
claims of any kind (including claims for labor, materials, supplies, and rent)
which, if unpaid, might become a Lien upon any or all of its Properties;
provided, however, Borrower shall not be required to pay any such tax,
assessment, charge, levy, or claim if the amount, applicability, or validity
thereof shall currently be contested in good faith by appropriate proceedings
diligently conducted by or on behalf of Borrower and if Borrower shall have set
up reserves therefor adequate under generally accepted accounting principles.
Section 4.4 Maintenance. Borrower will (i) maintain its corporate
existence, rights, and franchises; (ii) observe and comply (to the extent
necessary so that any failure would not have a Material Adverse Effect) with
all Governmental Requirements, and (iii) maintain its Properties (and any
Properties leased by or consigned to it or held under title retention or
conditional sales
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contracts) in good and workable condition at all times and make all repairs,
replacements, additions, and improvements to its Properties as are needed and
proper so that the business carried on in connection therewith may be conducted
properly and efficiently at all times.
Section 4.5 Further Assurances. Borrower will promptly cure any
defects in the creation and issuance of the Note and the execution and delivery
of this Agreement and the Security Instruments. Borrower will at its expense
promptly execute and deliver to Lender upon request all such other and further
documents, agreements, and instruments in compliance with or accomplishment of
the covenants and agreements in this Agreement and in the Security Instruments
or to further evidence and more fully describe the collateral intended as
security for the Note, or to correct any omissions in the Security Instruments,
or more fully to state the security obligations set out herein or in any of the
Security Instruments, or to perfect, protect, or preserve any Liens created
pursuant to any of the Security Instruments, or to make any recordings, to file
any notices, or obtain any consents, all as may be necessary or appropriate in
connection therewith.
Section 4.6 Reimbursement of Expenses. Borrower will pay all legal
fees incurred by Lender in connection with the preparation of this Agreement
and any and all Security Instruments contemplated hereby (including any
amendments hereto or thereto or consents or waivers hereunder or thereunder)
and will also pay all fees, charges or taxes for the recording or filing of the
Security Instruments. Borrower will also pay all out-of-pocket expenses of
Lender in connection with the administration of this Agreement and the Security
Instruments. Borrower will, upon request, promptly reimburse Lender for all
amounts expended, advanced, or incurred by Lender to satisfy any obligation of
Borrower under this Agreement or any Security Instrument or to collect the
Note, or to enforce the rights of Lender under this Agreement or any Security
Instrument, which amounts will include all court costs, attorneys fees
(including, without limitation, for trial, appeal, or other proceedings), fees
of auditors and accountants, and investigation expenses reasonably incurred by
Lender in connection with any such matters, together with interest at the
post-maturity rate specified in the Note on each such amount from the date of
written demand or request by Lender for reimbursement until the date of
reimbursement to Lender.
Section 4.7 Insurance. Borrower now maintains and will continue to
maintain with financially sound and reputable insurers, insurance with respect
to its Properties and business against such liabilities, casualties, risks, and
contingencies and in such types and amounts as is customary in the case of
Persons engaged in the same or similar businesses and similarly situated. Upon
request of Lender, Borrower will furnish or cause to be furnished to Lender
from time to time a summary of the insurance coverage in form and substance
satisfactory to Lender and if requested will furnish Lender copies of the
applicable policies. In the case of any fire, accident, or other casualty
causing loss or damage to any Properties of Borrower, the proceeds of such
policies shall be used (i) to repair or replace the damaged Properties, or (ii)
to prepay the Indebtedness. Borrower will obtain endorsements to the policies
pertaining to all Properties in which Lender shall have a Lien under the
Security Instruments, naming Lender as a loss payee and containing provisions
that such policies will not be canceled without 30 days prior written notice
having been given by the insurance company to Lender.
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Section 4.8 Accounts and Records. Borrower will keep books of record
and account in which full, true and correct entries will be made of all
dealings or transactions in relation to its business and activities, in
accordance with generally accepted accounting principles, consistently applied,
except only for changes in accounting principles or practices with which
Borrower's independent public accountants concur and Lender consents.
Section 4.9 Right of Inspection. Borrower will permit any officer,
employee or agent of Lender to visit and inspect any of the Properties of
Borrower, examine Borrower's books of record and accounts, take copies and
extracts therefrom, and discuss the affairs, finances, and accounts of Borrower
with Borrower's officers, accountants, and auditors, all at such reasonable
times and as often as Lender may desire.
Section 4.10 Notice of Certain Events. Borrower shall promptly notify
Lender if it learns of the occurrence of (i) any event which constitutes a
Potential Default, together with a detailed statement by a responsible officer
of the steps being taken to cure the effect of such Potential Default; or (ii)
the receipt of any notice from, or the taking of any other action by, the
holder of any promissory note, debenture, or other evidence of indebtedness of
Borrower with respect to a claimed default, together with a detailed statement
by a responsible officer specifying the notice given or other action taken by
such holder and the nature of the claimed default and what action Borrower is
taking or proposes to take with respect thereto; or (iii) any legal, judicial,
or regulatory proceedings affecting Borrower, or any of its Properties in which
the amount involved is material and is not covered by insurance or which, if
adversely determined, would have a Material Adverse Effect; or (iv) any event
or condition having a Material Adverse Effect.
Section 4.11 ERISA Information and Compliance. Borrower will promptly
furnish to Lender (i) if requested by Lender, promptly after the filing thereof
with the United States Secretary of Labor or the Pension Benefit Guaranty
Corporation, copies of each annual and other report with respect to each Plan
or any trust created thereunder, and (ii) immediately upon becoming aware of
the occurrence of any "reportable event," as such term is defined in Section
4043 of ERISA, or of any "prohibited transaction," as such term is defined in
Section 4975 of the Internal Revenue Code of 1954, as amended, in connection
with any Plan or any trust created thereunder, a written notice signed by the
president or the principal financial officer of Borrower specifying the nature
thereof, what action Borrower is taking or proposes to take with respect
thereto and, when known, any action taken by the Internal Revenue Service with
respect thereto. Borrower will fund all current service pension liabilities as
they are incurred under the provisions of all Plans from time to time in effect
for the benefit of employees of Borrower and comply with all applicable
provisions of ERISA.
Section 4.12 Fort Worth Office. Borrower will at all times during the
term hereof maintain an office located in Fort Worth, Texas.
Section 4.13 Withholding Taxes. Borrower will make timely payment or
deposit of all amounts of tax required to be withheld and paid to or deposited
with the United States pursuant to the provisions of Title C of the Internal
Revenue Code of 1954, as from time to time amended, with respect to any and all
wages paid to employees.
Loan Agreement - Page 11
12
Section 4.14 Regulatory and Environmental Compliance. Borrower shall
comply with all Governmental Requirements applicable to its business and to the
use of its Properties, including, without limitation, all Environmental
Requirements. As used herein, "Environmental Requirements" means all applicable
present and future federal, state, and local statutes, regulations, ordinances,
orders, actions, policies, or common law relating to the protection of human
health or the environment.
Section 4.15 Best Rating. Borrower shall cause General Agents
Insurance Company of America, Inc., to operate and maintain at all times its
business so as to ensure an "A" (excellent) or better rating by A.M. Best
Company.
ARTICLE 5
NEGATIVE COVENANTS
Borrower will at all times comply (and will cause the Insurance
Companies to comply) with the covenants contained in this Article 5, from the
date hereof and for so long as any part of the Indebtedness is outstanding:
Section 5.1 Other Liabilities. Without Lender's prior written consent,
Borrower will not incur or suffer to exist any indebtedness except: (a)
indebtedness to Lender; (b) indebtedness to trade creditors incurred in the
ordinary course of business; and (c) indebtedness in respect of taxes,
assessments, and governmental charges or levies, so long as continued existence
of such taxes or other liabilities does not result in a violation of Section
4.3 hereof.
Section 5.2 Liens. Borrower will not create, incur, assume or suffer
to exist any Lien on any of its Properties (now owned or hereafter acquired)
except:
(a) Liens securing the payment of any Indebtedness;
(b) Excepted Liens; and
(c) Liens existing on Properties owned by Borrower on the
date of this Agreement which are disclosed to Lender in Exhibit 5.2 hereto, and
all renewals and extensions thereof.
Section 5.3 Transactions with Affiliates. Borrower will not enter into
any transaction, including, without limitation, the purchase, sale, or exchange
of property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower's
business and upon fair and reasonable terms no less favorable to Borrower than
Borrower would obtain in a comparable arm's length transaction with a person or
entity not an Affiliate. This covenant respecting transactions with an
Affiliate does not pertain to transactions of an immaterial nature. As used
herein, the term "Affiliate" means any Person that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with Borrower.
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13
Section 5.4 Loans and Advances by Borrower. Borrower shall not,
without the prior written consent of Lender, make or permit to remain
outstanding any loans or investments to any Person.
Section 5.5 Sales and Leasebacks. Borrower will not enter into any
arrangement, directly or indirectly, with any Person whereby Borrower shall
sell or transfer any Properties, whether now owned or hereafter acquired, and
whereby Borrower shall then or thereafter rent or lease as lessee such
Properties or any part thereof or other Properties which Borrower intends to
use for substantially the same purpose or purposes as the Properties sold or
transferred.
Section 5.6 Merger, Etc. Borrower will not merge or consolidate with,
or sell, assign, lease, or otherwise dispose of (whether in one transaction or
in a series of transactions) all, substantially all, or any integral portion of
its Properties (whether now owned or hereafter acquired) to any Person.
Section 5.7 Proceeds of Note. Borrower will not permit the proceeds of
the Note to be used for any purposes other than those permitted by Section 3.12
hereof.
Section 5.8 ERISA Compliance. Borrower will not at any time permit any
Plan maintained by it to:
(a) engage in any "prohibited transaction" as such term
is defined in Section 4975 of the Internal Revenue Code of 1954, as amended;
(b) incur any "accumulated funding deficiency" as such
term is defined in Section 302 of ERISA; or
(c) terminate any such Plan in a manner which could
result in the imposition of a Lien on the Properties of Borrower pursuant to
Section 4068 of ERISA.
Section 5.9 Nature of Business. Borrower will not permit any material
change to be made in the character of its business as carried on at the date
hereof.
Section 5.10 Sale or Discount of Receivables. Borrower will not,
except to minimize losses on bona fide debts previously contracted, discount or
sell with recourse, or sell for less than the greater of the face or market
value thereof, any of its notes receivable or accounts receivable.
Section 5.11 Contingent Liabilities. Borrower will not guarantee the
obligations of any Person.
Section 5.12 Compensation and Management Fees. Borrower will not pay
any management or similar fees nor pay any unreasonable or unusual increases in
employee compensation.
Section 5.13 Purchase of Substantial Assets. Borrower will not
purchase, lease, or otherwise acquire all or substantially all of the assets of
any other Person or entity, without
Loan Agreement - Page 13
14
Lender's prior written consent, unless the aggregate contract price of all such
transactions does not exceed $5,000,000.
Section 5.14 Prepayments. Except with respect to revolving lines of
credit entered into with Lender's prior written consent, Borrower will not
directly or indirectly pay any indebtedness other than indebtedness owing to
Lender, prior to the date on which such indebtedness is due and payable in
accordance with the terms thereof (regardless of any right to prepay under the
terms of such indebtedness).
Section 5.15 Fiscal Year. Borrower will not change its fiscal year or
present methods of accounting.
Section 5.16 Cash Flow Coverage Ratio. Borrower will not allow the
cash flow coverage ratio to be less than 1.20:1.0. Such ratio is defined as the
quotient obtained by dividing: (a) the maximum allowable annual dividends
payable to Borrower under applicable state law by General Agents Insurance
Company of America, Inc. as of the preceding December 31; by (b) the sum of:
(i) Borrower's "annualized" year-to-date non-consolidated operating expenses,
plus (ii) annualized" year-to-date cash dividends paid or declared by Borrower,
plus (iii) $1,500,000. The cash flow coverage ratio will be calculated
substantially in the manner set forth in the Compliance Certificate attached
hereto as Exhibit B.
ARTICLE 6
FINANCIAL AND INVESTMENT RATIOS AND COVENANTS
FOR INSURANCE COMPANIES
Borrower will at all times cause the Insurance Companies to comply
with the following:
Section 6.1 Minimum Risk-based Capital. Risk-Adjusted Surplus to
Policyholders (as calculated in accordance with principles approved by The
National Association of Insurance Commissioners) will not be less than four (4)
times the Authorized Control Level Risk-based Capital.
Section 6.2 Maximum Combined Ratio. The "combined ratio" for the
Insurance Companies, measured as the sum for Insurance Companies of (i) the
"loss ratio" and (ii) the "expense ratio," shall not exceed 100% at any time.
Section 6.3 Bond Portfolio Investment Ratio. The Insurance Companies
shall not, without the prior written consent of Lender, invest in or hold bonds
which carry Standard and Poor's or Moody's ratings of less than BBB/Baa. The
bond holdings of the Insurance Companies rated AA/Aa or better, when combined
with the investments of the Insurance Companies in U.S. Treasury Securities and
short-term money market funds, shall represent not less than 80% of the
Insurance Companies' consolidated investment portfolio at any time.
Loan Agreement - Page 14
15
Section 6.4 Equity Investments Ratio. The equity investments of
the Insurance Companies shall not exceed 10% of the Insurance Companies'
consolidated investment portfolio at any time.
Section 6.5 Investments in High-Yield Securities. None of the
Insurance Companies shall, without Lender's prior written consent, invest in
any high-yield securities (commonly referred to as "junk securities"), nor in
any equity securities of issuers of such securities.
The ratios set forth above in this Article 6 shall be based upon the
consolidated reports prepared on a statutory basis and as furnished by the
Insurance Companies to Lender. For purposes of determining compliance with this
Agreement, the ratios will be calculated substantially in the manner set forth
in the Compliance Certificate attached hereto as Exhibit B, which manner of
calculation may differ from that used by the National Association of Insurance
Commissioners in reporting similar ratios.
ARTICLE 7
EVENTS OF DEFAULT
Section 7.1 Events of Default. Any of the following events shall be
considered an "Event of Default" as that term is used herein:
(a) Payments - default is made in the payment or
prepayment when due of any installment of principal or interest on the Note or
other Indebtedness; or
(b) Representations and Warranties - any representation
or warranty by Borrower in this Agreement or any Security Instrument proves to
have been incorrect in any material respect as of the date hereof; or any
representation, statement (including financial statements), certificate,
request, or other document furnished pursuant to or under this Agreement or any
Security Instrument (whether by Borrower, any Person party to any Security
Instrument, or any officer, accountant, or attorney thereof) proves to have
been incorrect in any material respect as of the date when made or deemed made;
or
(c) Affirmative Covenants - default is made in the due
observance or performance by Borrower of any of the covenants or agreements
contained in Article 4 of this Agreement; or
(d) Negative Covenants - default is made in the due
observance or performance by Borrower of any of the covenants or agreements
contained in Article 5 of this Agreement; or
(e) Financial Covenants - default is made in the due
observance or performance by Borrower of, or there is otherwise any failure to
comply with the standards and ratios set forth in, any of the terms, covenants,
or agreements contained in Article 6 of this Agreement, and such default or
failure continues unremedied for a period of 10 days after the
Loan Agreement - Page 15
16
earlier of (i) notice thereof being given by Lender to Borrower, or (ii) such
default otherwise becoming known to Borrower; or
(f) Security Instrument Obligations - default is made in
the due observance or performance by Borrower or any other Person of any of the
covenants or agreements contained in any Security Instrument; or
(g) Involuntary Bankruptcy or Other Proceedings - an
involuntary case or other proceeding shall be commenced against Borrower which
seeks liquidation, reorganization, or other relief with respect to it or its
debts or other liabilities under any bankruptcy, insolvency, or other similar
law now or hereafter in effect, or seeking the appointment of a trustee,
receiver, liquidator, custodian, or other similar official of it or any
substantial part of its Properties, and such involuntary case or other
proceeding shall remain undismissed or unstayed for a period of 30 days; or an
order for relief against Borrower shall be entered in any such case under the
federal Bankruptcy Code; or
(h) Voluntary Bankruptcy - Borrower shall commence a
voluntary case or other proceeding seeking liquidation, reorganization, or
other relief with respect to itself or its debts or other liabilities under any
bankruptcy, insolvency, or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian, or other
similar official of it or any substantial part of its Properties, or shall
consent to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of creditors, or shall fail
generally to, or shall admit in writing its inability to, pay its debts
generally as they become due, or shall take any corporate action to authorize
or effect any of the foregoing; or
(i) Discontinuance of Business - Borrower discontinues
its usual business; or
(j) Default on Other Indebtedness - Borrower fails to
make any payment due on any other indebtedness or obligation for the payment of
money; or any event shall occur or any condition shall exist in respect of any
such indebtedness or obligation, or under any agreement or instrument under or
by which any such indebtedness or obligation is created, evidenced, or secured,
the effect of which, with notice, lapse of time, or both, is to cause or to
permit any holder of such indebtedness or obligation or a trustee to cause such
indebtedness or obligation, or a portion thereof; to become due prior to its
stated maturity or prior to its regularly scheduled dates of payment; or
(k) Undischarged Judgments - Borrower shall fail within
30 days to pay, bond, or otherwise discharge any judgment or order for the
payment of money that is not otherwise being satisfied in accordance with its
terms or is not stayed on appeal; or
(l) Security Instruments - the Security Instruments after
delivery thereof shall for any reason, except to the extent permitted by the
terms thereof; cease to be in full force and effect and valid, binding, and
enforceable (except as enforceability may be limited as stated in Section 3.3
hereof) in accordance with their terms, or cease to create a valid and
perfected lien of
Loan Agreement - Page 16
17
the priority required thereby on any of the collateral purported to be covered
thereby, or Borrower shall so state in writing.
Section 7.2 Certain Remedies. Upon the occurrence of any Event of
Default described in Subsection 7.1(g) or (h) hereof; the obligations, if any,
of Lender hereunder shall immediately terminate, and the entire principal
amount of all indebtedness then outstanding together with interest then accrued
thereon shall automatically and immediately become due and payable, all without
written notice and without presentment, demand, protest, notice of protest or
dishonor, notice of intention to accelerate, notice of acceleration, or any
other notice of default of any kind, all of which are hereby expressly waived
by Borrower. Upon the occurrence and at any time during the continuance of any
other Event of Default, Lender may by written notice to Borrower (i) declare
the entire principal amount of all Indebtedness then outstanding together with
interest then accrued thereon to be immediately due and payable without
presentment, demand, protest, notice of protest or dishonor, notice of
intention to accelerate, or other notice of default of any kind, all of which
are hereby expressly waived by Borrower, and (ii) terminate the obligations, if
any, of Lender hereunder unless and until Lender shall reinstate same in
writing.
Section 7.3 Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, or if Borrower becomes insolvent, however
evidenced, Lender is hereby authorized at any time and from time to time,
without notice to Borrower (any such notice being expressly waived by
Borrower), to set-off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other indebtedness at any
time owing by Lender to or for the credit or the account of Borrower against
any and all of the Indebtedness of Borrower, irrespective of whether or not
Lender shall have made any demand under this Agreement or the Note and although
such obligations may be unmatured. Lender agrees promptly to notify Borrower
after any such set-off and application, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which Lender
may have.
ARTICLE 8
CONDITIONS OF LENDING
The obligation of Lender to make the Loan pursuant to this Agreement
is subject to the conditions precedent stated in this Article 8:
Section 8.1 Closing and Documentation. The obligation of Lender to
make the Loan under this Agreement is subject to the following conditions
precedent wherein each document to be delivered to Lender shall be in form,
substance, and detail satisfactory to Lender, in its sole discretion:
(a) Closing - On a Business Day acceptable to Lender
there shall have occurred a closing at which Borrower shall deliver to Lender
executed counterparts of this
Loan Agreement - Page 17
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Agreement and of all instruments, certificates, and opinions referred to in
this Article 8 not previously delivered.
(b) Note - Borrower shall have duly and validly issued,
executed, and delivered the Note to Lender.
(c) Secretary's Certificates -
(i) Lender shall have received certificates of
the secretary or assistant secretary of Borrower setting forth (A) resolutions
of its board of directors in form and substance satisfactory to Lender with
respect to the authorization of the Note, this Agreement, and any Security
Instruments provided herein and the officers of Borrower authorized to sign
such instruments, and (B) specimen signatures of the officers so authorized.
(ii) Lender shall also have received a copy,
certified as true by the secretary or assistant secretary of Borrower, of the
articles of incorporation and the bylaws of Borrower.
(d) Security Instruments - Lender shall have received the
following instruments, each duly and validly executed and delivered by the
respective parties thereto (other than Lender), and in sufficient executed
counterparts for recording purposes when applicable, as security for the Note
and other Indebtedness:
(i) Negative Pledge from Borrower by the terms of
which Borrower agrees not to pledge, transfer, or encumber any of its assets,
whether now owned or hereafter acquired, including stock held in its
subsidiaries.
(ii) Lender reserves the right at any time to
require the pledge of all of Borrower's stock in its subsidiaries as security
for the Loan, and any failure by Borrower to deliver such pledge on request in
form, substance, and detail satisfactory to Lender, shall constitute an
additional Event of Default under this Agreement. If required, the pledge or
security agreement covering the stock in the subsidiaries will also be a
Security Instrument.
(e) Other - Lender shall have received such other
documents as it may reasonably have requested at any time at or prior to the
closing referred to in Subsection 8.1(a) hereof
ARTICLE 9
MISCELLANEOUS
Section 9.1 Notices. Any notice required or permitted to be given
under or in connection with this Agreement, the Security Instruments, or the
Note shall be in writing and shall be mailed by first class or express mail,
postage prepaid, or sent by telex, telegram, telecopy, or other similar form of
rapid transmission confirmed by mailing (by first class or express mail,
postage prepaid) with written confirmation at substantially the same time as
such rapid
Loan Agreement - Page 18
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transmission, or personally delivered to an officer of the receiving party. All
such communications shall be mailed, sent, or delivered, (a) if to Borrower, to
its address shown at the beginning of this Agreement, or to such other address
and to such individual's or department's attention as Borrower may have
furnished Lender in writing; or (b) if to Lender, to its address shown at the
beginning of this Agreement, or to such other address and to such individual's
or department's attention as Lender may have furnished Borrower in writing. Any
communication so addressed and mailed shall be deemed to be given when so
mailed and any notice so sent by rapid transmission shall be deemed to be given
when receipt of such transmission is acknowledged, and any communication so
delivered in person shall be deemed to be given when receipted for by, or
actually received by, an authorized officer of Borrower or Lender.
Section 9.2 Amendments and Waivers. No provision of this Agreement,
the Security Instruments, or the Note may be amended or waived, except in
writing signed by Borrower (and any other Person, who is a party to any
Security Instrument being amended or with respect to which a waiver is being
obtained) and Lender.
Section 9.3 Invalidity. In the event that any one or more of the
provisions contained in the Note, this Agreement, or in any Security Instrument
shall, for any reason be held invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provision of the Note, this Agreement, or any Security Instrument.
Section 9.4 Survival of Agreements. All covenants and agreements of
Borrower herein and in the Security Instruments not fully performed before the
date hereof or the date of the Security Instruments and all representations and
warranties of Borrower herein or in the Security Instruments, shall survive
such date or dates.
Section 9.5 Successors and Assigns. All covenants and agreements
contained by or on behalf of Borrower in the Note, this Agreement, and any
Security Instrument shall bind its successors and assigns and shall inure to
the benefit of Lender and its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest herein, without the prior written consent of Lender. In the event that
Lender sells participations in the Note or other Indebtedness of Borrower
incurred or to be incurred pursuant to this Agreement, to other lenders, each
of such other lenders shall have the rights of set-off against such
Indebtedness and similar rights or Liens to the same extent as may be available
to Lender.
Section 9.6 Renewal. Extension. or Rearrangement. All provisions of
this Agreement and of any Security Instruments relating to the Note or other
Indebtedness shall apply with equal force and effect to each and all promissory
notes hereafter executed which in whole or in part represent a renewal,
extension of any period, increase, or rearrangement of any part of the
Indebtedness, originally represented by the Note or of any part of such other
Indebtedness.
Section 9.7 Waivers. No course of dealing on the part of Lender, its
officers, employees, consultants, attorneys, or agents, nor any failure or
delay by Lender with respect to exercising any right, power, or privilege of
Lender under the Note, this Agreement, or any
Loan Agreement - Page 19
20
Security Instrument shall operate as a waiver thereof; except as otherwise
provided in Section 9.2 hereof.
Section 9.8 Cumulative Rights. Rights and remedies of Lender under the
Note, this Agreement, and each Security Instrument shall be cumulative, and the
exercise or partial exercise of any such right or remedy shall not preclude the
exercise of any other right or remedy.
Section 9.9 Singular and Plural. Words used herein in the singular,
where the context so permits, shall be deemed to include the plural and vice
versa. The definitions of words in the singular herein shall apply to such
words when used in the plural where the context so permits and vice versa.
Section 9.10 Construction. This Agreement, the Note, and each Security
Instrument are contracts made under, and shall be construed in accordance with
and governed by, the laws of the United States of America and the State of
Texas, as such laws are now in effect and, with respect to usury laws, if any,
applicable to Lender and to the extent allowed thereby, as such laws may
hereafter be in effect which allow a higher maximum nonusurious interest rate
than now allowed.
Section 9.11 Performance by Lender. Should any covenant, duty, or
agreement of Borrower fail to be performed in accordance with this Agreement,
the Note, or any Security Instrument, Lender may, at its option, perform or
attempt to perform such covenant, duty, or agreement on behalf of Borrower. In
such event, Borrower shall, at the request of Lender, promptly pay to Lender
any amount expended in such performance or attempted performance, together with
interest thereon at the Highest Lawful Rate from the date of such expenditure
by Lender until repaid. Notwithstanding the foregoing, it is expressly
understood that Lender does not assume any liability or responsibility for the
performance of any of the duties of Borrower or any other Person hereunder or
in connection with all or any part of any Properties upon which Lender has or
will acquire a Lien.
Section 9.12 Indemnification of Lender. Borrower hereby indemnifies
and holds Lender harmless against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses, and
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against Lender, in any way relating to, or arising out
of this Agreement, the Note, the Security Instruments, or any of the
transactions contemplated therein, directly or indirectly, from any claims made
or actions, suits, or proceedings commenced by or on behalf of any Person other
than Lender.
Section 9.13 Expenditures by Lender. Any sums spent by Lender pursuant
to the exercise of any right or remedy provided under this Agreement, the Note,
or any Security Instrument shall become part of the Indebtedness and shall bear
interest at the Highest Lawful Rate from the date spent until the date repaid
by Borrower.
Section 9.14 Interest. It is the intention of the parties hereto to
conform strictly to usury laws applicable to Lender. Accordingly, if the
transactions contemplated hereby would be usurious under applicable law
(including the laws of the United States of America and the State of Texas),
then, in that event, notwithstanding anything to the contrary in the Note, this
Agreement,
Loan Agreement - Page 20
21
or in any Security Instrument or other agreement entered into in connection
with or as security for the Note, it is agreed as follows: (i) the aggregate of
all consideration which constitutes interest under law applicable to Lender
that is contracted for, taken, reserved, charged, or received under the Note,
this Agreement, or Security Instruments or under any of the other aforesaid
agreements or otherwise with respect to the Note and the Indebtedness, after
giving effect to reductions, if any, required by law from the nominal amount
loaned to or incurred by Borrower hereunder to determine the true principal
amount thereof; shall under no circumstances exceed the maximum amount of
nonusurious interest allowed by such applicable law, and the excess, if any,
shall be credited by Lender on the principal amount of the Indebtedness (or, if
the principal amount of the Indebtedness shall have been paid in full, refunded
to Borrower); and (ii) in the event that the maturity of the principal amount
of and accrued interest with respect to the Note and the Indebtedness is
accelerated by reason of an election of Lender resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to Lender may never, after giving effect to reductions, if any,
required by law from the nominal amount loaned to or incurred by Borrower
hereunder to determine the true principal amount thereof; include more than the
maximum amount of nonusurious interest allowed by such applicable law, and
excess interest, if any, provided for in this Agreement or otherwise shall be
canceled automatically as of the date of such acceleration or prepayment and,
if theretofore paid, shall be credited by Lender on the principal amount of the
Indebtedness (or, if the principal amount of the Indebtedness shall have been
paid in full, refunded by Lender to Borrower). All interest so paid or agreed
to be paid under the Note, this Agreement, or any Security Instrument shall, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full period of the Loan until payment in full of the
Indebtedness so that the interest for such full period shall not exceed the
maximum amount of nonusurious interest allowed by such applicable law. To the
extent that Article 5069-1.04, as amended, of the Texas Revised Civil Statutes
is applicable to Lender for the purpose of determining the Highest Lawful Rate,
Lender hereby elects to determine the applicable rate ceiling under such
Article by the indicated (weekly) rate ceiling from time to time in effect,
subject to Lender's right subsequently to change such method in accordance with
applicable law.
Section 9.15 References. The words "herein," "hereof;" "hereunder,"
and other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section, or
subsection.
Section 9.16 Entire Agreement. The Note, this Agreement, and the
Security Instruments embody the entire agreement and understanding between
Lender, Borrower, and the other respective parties and supersede all prior
agreements and understandings between such parties relating to the subject
matter hereof and thereof
Section 9.17 Exhibits. The exhibits attached to this Agreement are
incorporated herein and shall be considered a part of this Agreement for the
purposes stated herein, except that in the event of any conflict between any of
the provisions of such exhibits and the provisions of this Agreement, the
provisions of this Agreement shall prevail.
Section 9.18 Titles of Articles. All titles or headings to articles,
sections, subsections, or other divisions of this Agreement or the exhibits
hereto are only for the convenience of the parties
Loan Agreement- Page 21
22
and shall not be construed to have any effect or meaning with respect to the
other content of such articles, sections, subsections, or other divisions,
such content being controlling as to the agreement between the parties hereto.
Section 9.19 Counterparts. This Agreement may be executed in two or
more counterparts, and it shall not be necessary that the signatures of all
parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
THIS WRITTEN LOAN AGREEMENT TOGETHER WITH THE OTHER LOAN INSTRUMENTS
MENTIONED HEREIN REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
Executed effective as of the date first written above.
BORROWER:
GAINSCO, INC.
By: /s/ XXXXXX X. XXXXX
-------------------------------
Xxxxxx X. Xxxxx,
Senior Vice President
and Chief Financial Officer
LENDER:
BANK ONE, TEXAS, N.A.
By: /s/ XXXX X. XXXXXXX
-------------------------------
Xxxx X. Xxxxxxx
Vice President
Exhibits
A - Note
B - Compliance Certificate
Loan Agreement - Page 22
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NOTICE OF FINAL AGREEMENT
To: GAINSCO, INC. ("Borrower")
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
As of the effective date of this Notice, Borrower and BANK ONE, TEXAS, NATIONAL
ASSOCIATION ("BANK") have consummated a transaction pursuant to which Bank has
agreed to make a loan or loans to Borrower, to renew and extend an existing
loan or loans to Borrower, or to otherwise extend credit or make financial
accommodations to or for the benefit of Borrower, in an aggregate amount up to
$5,000,000.00 (collectively, whether one or more, the "LOAN").
In connection with the Loan, Borrower and Bank and the undersigned guarantors
and other obligors, if any (collectively, whether one or more, "OTHER
OBLIGORS") have executed and delivered and may hereafter execute and deliver
certain agreements, instruments, and documents (collectively hereinafter
referred to as the "WRITTEN LOAN AGREEMENT").
It is the intention of Borrower, Bank, and Other Obligors that this Notice be
incorporated by reference into each of the written agreements, instruments and
documents comprising the Written Loan Agreement. Borrower, Bank, and Other
Obligors each warrant and represent that the entire agreement made and existing
by or among Borrower, Bank, and Other Obligors with respect to the Loan is and
shall be contained within the Written Loan Agreement, as amended and
supplemented hereby, and that no agreements or promises exist or shall exist by
or among, Borrower, Bank, and Other Obligors that are not reflected in the
Written Loan Agreement.
THE WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
Effective Date: September 9, 1996.
BANK ONE TEXAS, NATIONAL ASSOCIATION
By: /s/ XXXX X. XXXXXXX
-------------------------------
Xxxx X. Xxxxxxx,
Vice President
ACKNOWLEDGED AND AGREED:
BORROWER:
GAINSCO, INC.
By: /s/ XXXXXX X. XXXXX
----------------------------------
Xxxxxx X. Xxxxx
Senior Vice President and
Chief Financial Officer
